Japanese Yen bulls remain on the sidelines amid BoJ rate-hike uncertainty – FXStreet

• The Japanese yen is struggling to gain meaningful traction amidst all the clues.
• Uncertainty about the Bank of Japan's interest rate hike and disappointing data are holding back the yen's upside.
• Betting on a small Fed rate cut to prop up the US dollar and support USD/JPY.

The Japanese yen (JPY) remained in a narrow range against the US yen during Asian trading on Wednesday, and for now appears to have stalled its recovery from its previous low since early August. . Uncertainty surrounding the Bank of Japan's (BOJ) interest rate hike plans has turned out to be a major headwind for the yen. In addition to this, the disappointing announcement of Japan's core machinery orders for August has put yen bulls on the defensive.

That said, an upturn in global risk sentiment, as evidenced by the weakness in stock markets, may continue to provide some support to the safe-haven Japanese yen amid persistent geopolitical risks. be. Additionally, a modest decline in the US dollar (USD) could help limit any meaningful upside for the USD/JPY pair. Still, bets on a modest rate cut by the Federal Reserve suggest that the path of least resistance for spot prices remains the path to the upside.

Daily Digest Market movements: The Japanese yen continues to decline due to multiple factors

• The Japanese yen is struggling to capitalize on its recovery from the previous day's low against the US dollar since early August, as questions remain over when the Bank of Japan will raise interest rates again.
• A sharply dovish shift in Bank of Japan Governor Kazuo Ueda's rhetoric and Japanese Prime Minister Shigeru Ishiba's surprising opposition to further interest rate hikes have heightened uncertainty over monetary policy.
• Japan's core machinery orders fell by 1.9% in August, falling for the second consecutive month, much lower than expected and indicating a deterioration in demand, according to government data released on Wednesday.
• Given that manufacturing accounts for about 15% of Japan's workforce, weak orders will have an impact on the labor market, slowing wage growth, reducing consumer spending, and complicating the Bank of Japan's interest rate hike plans. may lead to
• Japan's next economic stimulus package will be larger than last year's package, which was funded with an additional 13 trillion yen ($87 billion), a government spokesperson said on Wednesday.
• The US dollar is near its highest level since August 8, as expectations grow for the US Federal Reserve to ease monetary policy aggressively, leading to a 25 basis point regular interest rate cut in November. The value is solidified.
• San Francisco Federal Reserve President Mary Daly said Tuesday that the U.S. central bank has made significant progress in curbing inflation and expects one or two more rate cuts this year if economic projections are met.
• Atlanta Fed President Rafael Bostic said there are no strong signs that a recession is imminent as the U.S. economy remains strong and inflation is returning to 2%.
• The Biden administration has warned Israel that if it does not take immediate action to increase humanitarian aid to Gaza, it could face penalties, including the possibility of halting U.S. arms transfers.

Technical Outlook: The bullish bias remains for USD/JPY and a break above the 150.00 mark remains possible.

From a technical perspective, further decline is likely to find decent support around 148.60-148.55. However, some follow-through selling could push the USD/JPY pair further below the 148.00 round price and test last week's lows around 147.35. The latter is followed by the 147.00 mark, which, if broken decisively, would signal that the recent gains seen over the past month or so have run their course, paving the way for further declines. It will be.

On the contrary, the psychological mark of 150.00 seems to be acting as a strong barrier for the time being, above which the USD/JPY pair accelerates a positive move towards August monthly swing highs around 150.85-150.90 There is a possibility that A follow-through buy above the 151.00 mark will be seen as another trigger for bullish traders and the spot price will rise to around 152.00 on its way to the 152.65-152.70 area.